Having covered her fall from grace several times before, I can confidently tell you what happened that caused this in just one simple phrase.
Anything and everything that could've gone wrong, went wrong.
There was some lackluster writing on the part of RAW creative that really broguht her down from Feburary of 2017 to June that same year. The Bliss vs Bayley storyline went from a great contrast between two talents from Payback to nothing short of a disaster by Extreme Rules. And then there was the promo she cut two weeks later which regardless of your opinion, it should've at least lead to something. But what really killed her I think was when she got her arm injured before her SummerSlam match. The very moment that happened, I knew she was done for on RAW. At least as a top star. Even as she has come back, the moment she was boo'ed on RAW was bar-none the absolute low point of her career and always will be.
However, I cannot place all of the blame on creative. I never have and I likely never will, because I feel that you can always find a reason outside of creative not getting behind them or using them all wrong for a wrestler falling short of what they're capable of. Some part of blame has to be put on Bayley herself for simply failing to live up to the hype. Simply put, she is not the female John Cena as we thought she would be and that is because she is not on the level Cena stood for. Cena and Bayley are clearly strong workers that have made psychology their partner in crime for years and when it comes to inner charisma, they're among the top of their class; everything else on the other hand is another story entirely. Where as Cena has the A.A, a long great move that has ended many matches over the years with an exclamation point, Bayley has a belly to belly suplex which is fine for a moveset; but not as a finisher. Or at least, a good finisher (I actually like her elbow drop more). And where as Cena can sell you ice cream in Antarctica without a sweat, Bayley is extremely forced when it comes to promos and at times, she sounds completely wooden. This is not a problem she has just recently occurred either, this is a problem she has even as far back as NXT. She was able to get away with it however because-
A. She was in a different environment that catered to a different group of fans.
B. There is a different group of writers there than in WWE and thus, different ways on how to write and book storylines.
C. She was (and still is) one of the most genuinely lovable people you will ever meet and is a fantastic babyface.
And D. She was carried by many of her other peers. (usually on the mic, occasionally in the ring)
It's funny to, because from August of 2016 to April of 2017, she was doing well for herself. She debuted to thunderous applause, she won the RAW womens title, she was a part of WrestleMania. And now? Nothing. Just a footnote. To me, personally: The warning signs began when she first won the women's title. It was a great moment, yes. But it was too much, too soon and went against her character, and from there on: It was all downhill from there.
But do I feel all hope is lost for her?: I personally don't think so. So then, what can (realistically) be done to bring her back to prominence? I have four solutions, that I would like to present.
A. The most obvious- Send her to SmackDown and completely start over from square one.
B. The most risky- Turning her heel, I argued for this before and I still believe that it could work given the right context. And given everything she's been through, I could see her snapping and pulling a Sami Zayn.
C. The most interesting- A feud with Sasha Banks. People have wanted to see this happen on the main roster for a long time now, myself included: If this were to happen, Bayley could get over as a babyface once again. Especially if Sasha were the heel.
And D. The most unexpected- A temporary stay on NXT- You don't have to have it last long, three to six months at best. And you don't even have to have her win back the women's title, all you really need to do is to have her go on a barnstorming tour to remind the fans why they loved her in the first place.
As for Bayley's fall: It's unfortunate that something like this could happen to someone as nice a person as her. But that sadly is how the wrestling business works at times, you want one thing: But the wrestling gods go the other way. The ones you hope to succeed don't turn out the way you plan them to be and the people that have the potential to be game-changers either fall hard or simply never reach it.
In short: The wrestling business is unfair and in some cases cruel. But in the end, we can't do anything about it except watch the repercussions of this week and see what next week brings for us. To put it in more blunt terms: It is what it is.